Oil prices rise in response to Nigerian strike

Protests have taken place across Nigeria as the withdrawal of a fuel subsidy has caused widespread unrest. It is claimed by protestors that since the subsidy has been scrapped, the price of fuel has effectively doubled, and many are now finding themselves too poor to afford fuel.

Though many protests have been peaceful, some areas have been subjected to disorder caused by rioting youth gangs. These protests coincide with increasing religious violence in Nigeria’s south, which some see as an early indicator of an impending civil war.

What is particularly worrying for the international community, however, is the fact that one of Nigeria’s oil unions made the following statement: “we hereby direct all production platforms to be on red alert in preparation for total production shutdown.” Though no action has yet been taken, this simple threat helped see the price of Brent crude rise by more than US$ 1.

The other major factor behind the raise in oil prices is the increasing tension over Iran’s nuclear programme and the USA's drive for sanctions on Iranian oil.

The difficulties in Nigeria look set to last for some time: the oil unions insist on the subsidy being reinstated before negotiations can begin, whilst government officials remain adamant that the US$ 8 billion a year saved by scrapping the subsidy is necessary to pay for much-needed improvements to the nation’s infrastructure.

Published on 12/01/2012

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